Valmiki J. Mehta, J.:-

1. An issue of far reaching importance calls for decision in the present petition which is filed under Section 34 of the Arbitration & Conciliation Act, 1996. On behalf of the petitioner/Union of India, it is argued that in view of Clause 16(2) of the General Conditions of Contract (GCC) applicable to the contract in question, petitioner cannot be held liable for payment of any interest on the amounts awarded by the Arbitrator to the respondent/contractor, and that this defence and shield of non-liability for payment of interest enures for the benefit of the petitioner irrespective of the length of the time for which arbitral and court/judicial proceedings continue. In sum and substance, it is argued that even if the petitioner/UOI is found liable to pay any amount to the contractor, whether in a civil suit or any arbitration proceedings by an award, petitioner because of Clause 16(2) of the GCC cannot be called upon to pay interest for the pre-reference/present period or the post reference period including pendente lite period and till passing of the Award/decree.

2. Counsel for the petitioner places reliance upon, the below mentioned judgments of the Supreme Court and one judgment of the Full Bench of this Court, to argue that the Supreme Court has held that Clause 16(2) of the GCC is a valid clause thereby disentitling a contractor for payment of interest although the award is in favour of the contractor. In all the judgments relied upon on behalf of the petitioner, the same deal either with Clause 16(2) of the GCC or to contractual clauses in other contracts which are similar/more or less identical to the subject Clause 16(2) of the GCC. These judgments of the Supreme Court and Full Bench judgment of this Court are as under:-

(i) Sree Kamatchi Amman Constructions v. Divisional Railway Manager (Works), Palghat & Others, (2010) 8 SCC 767;

(ii) Sayeed Ahmed & Co. v. State of U.P. and Ors., (2009) 12 SCC 26;

(iii) Union of India v. Saraswat Trading Agency and Others, (2009) 16 SCC 504;

(iv) Union of India v. Krafters Engineering and Leasing Private Limited, (2011) 7 SCC 279;

(v) Union of India v. M/s. Bright Power Projects (I) P. Ltd., (2015) 7 SCALE 638; and

(vi) Full Bench judgment of this Court in FAO(OS) No. 494/2010 decided on 24.2.2012 titled as Union of India v. M/s Conbes India Pvt. Ltd. and which essentially relies upon the judgment of the Supreme Court in the case of Krafters Engineering and Leasing Private Limited (supra).

3. The judgments of the Supreme Court and the Full Bench judgment of this Court relied upon by the petitioner do squarely apply in favour of the petitioner because the ratio of these judgments is that if there is a contractual clause which provides that interest will not be payable, then, on account of such a clause, a contractor is not entitled to payment of interest on the amount awarded in his favour by a decree/award. Therefore, once a contractual clause prohibits grant of interest, then, under the Arbitration & Conciliation Act, 1996, interest cannot be granted for either the pre-reference or the post-reference period till the award is passed. Ordinarily therefore this petition would have had to be allowed by setting aside the impugned Award dated 11.2.2002 to the extent that the Arbitrator has awarded interest in favour of the respondent and against the petitioner for the pre-reference period and the post-reference period till the passing of the Award, however, Learned Senior Counsel for the respondent has very vehemently argued that the clause in question no doubt has been interpreted and applied by the Supreme Court in its aforesaid decisions to deny the claim of interest, but, the fact of the matter is that the subject Clause 16(2) of the GCC is invalid/void and thus liable to be struck down in view of the provision of Section 23 of the Indian Contract Act, 1872 and hence the said Clause 16(2) will not stand in the way of the respondent being entitled to interest.